BRISBANE • PERTH • MELBOURNE • SYDNEY • ADELAIDE
DIGGING&DRILLING AUSTRALASIA
AustralaSIA’s Monthly Oil, Gas & Mining Magazine July 2012 • Issue 1
WOODSIDE Lifts Production TargetRecord numbers point to style of Africa
ICHTHYS: A Joint Venture for the Greater Good INPEX and TOTAL reach agreement transfer a 6% of the Ichthys LNG Project equity interest to TOTAL group companies
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TERMS AND CONDITIONS • Instructions on how to enter, prize details and other information contained within the promotional advertisements form part of these terms and conditions. • To enter “Subscribe & Win” promotion you must purchase a 12-months subscription to Digging & Drilling Australasia as well as complete and submit entry form as requested by 23:59 on 31 August 2012. • All entrants must be over the age of 18 years. • The promoter is Digging & Drilling Australasia (D&D), ABN 52 138 616 109 in conjunction with Singapore Airlines. • The prize winner will be drawn on 3 September 2012. The winner will be notified by telephone or via e-mail. • The prize consists of two (2) Economy Class return tickets to Houston (USA). The winner is responsible for travel costs to and from the point of departure, government and airport taxes, travel insurance, freight, excess baggage, ground transportation and other associated costs. The winners may travel between 01 August 2012 to 15 December 2012, and 14 January 2013 to 31 March 2013 • Tickets are valid for a stay away of no more than 3 months • The prize tickets are not transferable • The tickets are not eligible for frequent flyer points • The ticket validity cannot be extended and any travel not utilised by 31 March 2013 will be deemed null and void •Tickets must be issued by 28 March 2013 • The Promoter shall not be liable for any loss or damage whatsoever which is suffered (including but not limited to direct or consequential loss) or for any personal injury suffered or sustained in connection with any prize/s. The winner may be required to sign a legal release in a form determined by the Promoter in its absolute discretion. The Promoter reserves the right to refuse to allow the winner to take part in any or all aspects of the prize, if the Promoter determines, in its absolute discretion, that the winner is not in the mental or physical condition necessary to safely participation in the prize. • Employees of Digging & Drilling Australasia and Singapore Airlines and their subsidiaries and immediate family are ineligible to enter. • Entry into this competition signifies acceptance of all conditions. The Promoters’ decision will be final and no correspondence will be entered into. • By entering this promotion, entrants agree to accept unsolicited promotional emails from Digging & Drilling Australasia and any in-house promotions that fall under the business umbrella. • By entering this promotion, entrants agree to be photographed and have their images used by the promoter for promotional purposes without payment.
2 DIGGING & DRILLING MAGAZINE | JULY 2012
To Our Readers W
elcome to the inaugural edition of Digging & Drilling Australasia print and on-line magazine.
The Australian Resource Sector is vitally important to our wonderful country and for our future prosperity. It is for this reason that in the twenty years I have worked in publishing and broadcast media, I have never felt more proud or privileged to be associated with a publication, as I feel managing Digging & Drilling Australasia magazine.
Len Fretwell
MANAGING EDITOR Digging & Drilling Australasia
D&D Australasia print and on-line magazine will report current and interesting Oil, Gas and Mining news and events in a format that is interesting to industry executives and the FIFO workforce. Our articles cover major energy, exploration and resource projects, machinery, safety, recruiting and other industry related innovations and events. We will also regularly feature high profile Oil, Gas and Mining industry executives. We have launched this magazine with 5,000 print copies which have been bulkdistributed free, to over 300 Australian Oil, Gas and Mining companies and to commercial and charter, airport and helicopter terminals servicing Mining sites and off-shore, Oil and Gas platforms. We have also posted and emailed D&D Australasia direct to over 500 Resource Sector executives and purchasing officers. Our content contributors and advertisers have also been offered print copies to distribute to their clients and employees. Initially, D&D Australasia will be published bi-monthly and we plan to become a monthly magazine in the last quarter of 2012. We are always looking for up-todate industry news and I am happy to make an open invitation to the Australasian Resource Sector to contact me personally with potential content material. I would like to take this opportunity to thank my Co-Founder, Emmanuel Solomon, our Designer, Elvin Wong and our devoted team for their tireless efforts in producing this print and on-line publication. I hope you enjoy reading this inaugural edition and I look forward to your feedback.
Best Regards
JULY 2012  DIGGING & DRILLING MAGAZINE  3
WHAT’S IN THIS 06» ISSUE
IN THIS ISSUE 03 TO OUR READERS 08 In Brief: Mining News highlights for the month 10 In Brief: Oil & Gas News highlights for the month 12 FEATURE ARTICLE: ICHTHYS - A Joint Venture for the Greater Good 18 Project PostCard 21 Feature Article: MINING - AFRICA DOWNUNDER 24 Feature ARTICLE: Oil & Gas - Woodside Lifts Production 28 Sub Feature: Mining INDABA 32 Sub Feature : POSCO, Marubeni pour $3.6 billion into
Australia iron ore project
Digging & Drilling c/o The Afriqan Times, Level 28 AMP Tower Australasia 140 St Georges Terrace Perth WA 6000 P. O. Box 445, South Perth 6951 Tel: 1300 A TIMES (1300 2 84637) Fax: +61 8 94636232 Feedback info@diggingdrilling.com News inquiries editor@diggingdrilling.com Advertising inquiries len.fretwell@diggingdrilling.com • Mobile: 0417 001 080 Editor Writers Guest Writers Special Features by
Len Fretwell Stephen Dawson Dominic Piper Emmanuel K Solomon
Graphics Elvin Wong Photography Emily Dimozantos, Andrea Klarin, Ben Scott, Priscilla Appiah Subscription www.diggingdrilling.com Publishing Digging & Drilling is published by The Afriqan Times Information and is Australian owned and operated. ABN: 521 386 161 09 / ACN: 138 616 109 VISIT US AT www.diggingdrilling.com COVER PLUTO LNG PLANT Digging & Drilling Australasia welcomes comments and suggestions, as well as information about errors that call for corrections. We are committed to presenting information fairly and accurately. Disclaimer: Reasonable care is taken to ensure that Digging & Drilling Magazine articles and other information are up-to-date and accurate as possible, as of the time of publication, but no responsibility can be taken for any errors or omissions contained herein. The opinions expressed are those of the authors and do not necessarily reflect the views of Digging & Drilling Magazine. The publisher, editors, contributors and related parties shall have no responsibility for any action or omission by any other contributor, consultant, editor or related party.
4 DIGGING & DRILLING MAGAZINE JULY 2012
SAN FRANCISCO
PA R I S
SHANGHAI
SINGAPORE
J A K A R TA
SYDNEY
DELHI
OVER 60 MAJOR CITIES
Moments
MOMENTS IN PICs »
Event: AABC Beyond Mining
6 DIGGING & DRILLING MAGAZINE JULY 2012
Event: INDABA 2012
JULY 2012 DIGGING & DRILLING MAGAZINE 7
IN BRIEF » Mining News highlights for the month:
Rio Tinto to drop €1bn Portugal project
Miners chase a slice of China’s growth
LISBON – Mining giant Rio Tinto is set to pull out of a planned iron-ore project NEW YORK - China’s need for raw worth over €1-billion ($1.23-billion) in Portugal. materials to feed its fast-growing economy will result in more tie-ups “The Moncorvo mines project will go ahead, but most likely without Rio Tinto,” with large, international mining houses, said one of the sources, adding that although formally the talks with the Anglosenior industry executives said at Australian miner have not ended yet, the result was practically clear. “Rio Tinto Reuters Mining Summit this week. is choosing to give up smaller projects and Moncorvo should be one of them.” Moncorvo, in northern Portugal, holds one of the largest iron-ore deposits in Europe.
Gold shines as ornament and investment
Exchangetraded Lackofgood fundsgoodforgold projectsputs prices-Placer miningboomatrisk
NEW YORK - Gold’s allure shows no sign of waning as Asian consumers don more jewelry, investors spurn currencies and Swiss vaults bulge with the alternative investment, top gold executives said at the Reuters Mining Summit this week.
NEW YORK - Recently introduced Exchange Traded Funds in gold have helped generate demand in the precious metal, keeping prices high, the head of the world’s fifth biggest gold miner said on Thursday at the Reuters Mining Summit in New York.
Metal miners eye reform in Indonesia
RUSALgoaltobetop Goldhedging aluminum seenlosing makerontrack pariahstatus
NEW YORK - Indonesia’s mineral riches are tempting miners keen to profit from sizzling metal prices, but the country must do more to attract large-scale foreign investment, top executives active in the country said.
NEW YORK - Russia’s RUSAL, the No. 3 primary aluminum producer, has said it aims to be the world’s No. 1, and the head of its American arm told Reuters’ Mining Summit on Thursday that the company’s plans are on track.
8 DIGGING & DRILLING MAGAZINE JULY 2012
After years of suffering, the mining industry is finally somewhat bullish on its own prospects. But senior executives at the Reuters Mining Summit this week reported a pronounced lack of good new projects of the kind that last for decades and make a company’s fortune.
NEW YORK - Hedging is no longer the black mark against a gold producer’s name that it was a year or two ago as hedged companies have not gone bankrupt and investors have shifted their gaze to other pressing industry concerns, two prominent gold industry participants said.
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*ADR 81/02 fuel consumption combined cycle - Source: JATO, 5 June 2012. Overseas model shown. AUDI5424/A4/D&D/FPC/2007
IN BRIEF » Oil & Gas News highlights for the month:
Statoil to explore shale gas in Australia OSLO, June 20 (Reuters) - Norwegian oil and gas firm Statoil has entered into partnership with PetroFrontier Corp to explore for shale gas in Australia, the company said on Wednesday.Statoil said the partners could drill 10-20 wells by 2017, with Statoil committing $25 million for the first phase of the exploration programme in Autralia’s Northern Territories.
Australia’s Woodside not looking to buy back Shell Woodside Petroleum (WPL.AX), Australia’s largest oil and Gas Company, said it is not considering buying back Royal Dutch Shell’s (RDSa.L) 24 percent stake in the company, despite a recent share price drop.
Petrofrontier will operate the first phase of the programme while Statoil has secured options to operate from the second exploration phase in addition to (Reporting by Reuters) increase ownership interests from 25 to 65 percent of PetroFrontier’s interests, it added.
Total eyes operator role in new Australia gas, oil projects ADELAIDE, May 14 (Reuters) - Total owns a 24 percent stake in the French oil firm Total is looking for Ichthys LNG project. It has agreed to oil and unconventional gas projects raise that stake to 30 percent, and in Australia in which it could take a the deal should get final agreement role as operator, the company’s chief within a few weeks, he said. Total also owns 27.5 percent of the Gladstone executive said on Monday. LNG project. Australia is on its way to becoming the world’s largest liquefied natural De Margerie will meet Australia Prime gas (LNG) exporter, with around $170 Minister Julia Gillard on Tuesday and billion in projects under construction. would discuss the possibility of Total Total already has minority stakes in taking a bigger role in Australia’s oil two of those projects, and is looking to and gas sector then, he said. expand, Christophe de Margerie said. Labour costs in Australia were high “There are opportunities around but not enough to dissuade Total unconventional gas and oil,” he told from investing in more projects, de reporters on the sidelines of an Margerie said. industry event in Australia. The most recent cost estimate for the “We are interested in the opportunities Ichthys project is $34 billion, from an to develop our own activity, I mean by original estimate of $20 billion made in 2008. Simultaneous work on a operating.” swathe of energy and mining projects 10 DIGGING & DRILLING MAGAZINE JULY 2012
has driven up costs across the country. Still, Australia’s access to fast-growing Asian energy markets and its operating environment made it a good target for investment, de Margerie said. Projects in Australia helped balance Total’s portfolio, he added, which was otherwise skewed toward investment in developing countries. Recent weak Chinese economic data had led to no pull back for Total in projects focused on Asia’s energy market, de Margerie said. “We are a long-term industry. We don’t do things based on one-day this, oneday that,” he said. “We know that in the long term Asia will need a lot of additional oil and gas to cover demand. China and others in the region will still need more energy.”
ICHTHYS - A Joint Venture for the Greater Good INPEX CORPORATION (INPEX) is pleased to announce today that INPEX and TOTAL S.A. (TOTAL) have reached agreement for INPEX Ichthys Pty Ltd and other project group companies to transfer a 6% of the Ichthys LNG Project equity interest(*) to TOTAL group companies By Stephen Dawson
Image: courtesy Woodside
FEATURE ARTICLE»
INPEX CORPORATION (INPEX) is pleased to announce today that INPEX and TOTAL S.A. (TOTAL) have reached agreement for INPEX Ichthys Pty Ltd and other project group companies to transfer a 6% of the Ichthys LNG Project equity interest to TOTAL group companies. The Ichthys LNG Project equity interest includes the following elements: 1. Participating interest in production licenses WA-50-L (Ichthys gas-condensate field) and WA-51-L 2. Participating interest in exploration permit WA-285-P (adjacent to WA-50-L) 3. Shares of Ichthys LNG Pty Ltd (a downstream company which owns LNG facilities, liquefies natural gas and does marketing LNG and liquids)
14 DIGGING & DRILLING MAGAZINE JULY 2012
INPEX and TOTAL have enjoyed a good long-term partnership through collaboration on a number of oil and natural gas projects globally, including the Offshore Mahakam Block in Indonesia, which is one of INPEX’s core assets. TOTAL joined the Ichthys LNG Project in 2006 with a 24% participating interest. Since then, TOTAL has made a large contribution by bringing its expertise and experience in designing and executing large offshore developments and LNG projects. TOTAL’s increased level of participation reinforces its commitment to the Ichthys LNG Project while the partnership of the two companies will be further expanded. After the completion of the transfer of the 6% of the Ichthys LNG Project equity interest to Total, the joint venture partners for the Ichthys LNG Project will be as follows:
Images: courtesy Resource News
INPEX TOTAL Tokyo Gas Osaka Gas Chubu Electric
66.070% 30.000% 1.575% 1.200% 0.735%
Australian government)
(subject to approval of the
Toho Gas 0.420%
The Ichthys LNG Project Joint Venture participants appreciate the continued support from the local communities, the governments of Australia, Western Australia and Northern Territory, as well as support from other stakeholders for timely delivery of the Ichthys LNG Project. The Ichthys LNG Project is a Joint Venture between INPEX group companies (the Operator), TOTAL group companies and other participants. Gas from the Ichthys field, in the Browse Basin offshore Western Australia, will undergo preliminary processing offshore to remove water and raw liquids, including some condensate. The gas will then be exported to the onshore liquefaction plant in Darwin via an 889km subsea pipeline. The Ichthys LNG Project is expected to produce 8.4 million tonnes of LNG and 1.6 million tonnes of LPG per annum, along with approximately 100,000 barrels of condensate per day at peak.
JULY 2012  DIGGING & DRILLING MAGAZINE  15
Westsea Solutions
Providing Tugs & Barges for
WA-based company Westsea Marine is working with Saipem-Leighton Consortium(SLC) to supply vessels and barges for the Chevron-operated Gorgon project.
technologies and a modern fleet of vessels, we are the preferred provider of offshore support vessels in the oil and gas industry.
Westsea is a trusted partner, acknowledged and depended upon for our experience and capabilities. Combining a dedicated and highly skilled team with innovative
Westsea Marine is supplying 28 vessels comprising of Work Barges, Anchor Handling Tow Tugs and Support Vessels, to support the construction of the 2.1km LNG jetty and marine structures at Barrow Island, off the north coast of WA.
16  DIGGING & DRILLING MAGAZINE  JULY 2012
Our know-how, expertise and marine experience delivers innovative and cost effective solutions to our clients across the oceans in the most challenging offshore environments.
Marine Solutions. The total value of the contract is in excess of $100 million, with the first phase of vessel deliveries already being completed earlier this year. The SLC contract includes the construction of the LNG Loading Jetty, Heavy-Lift Facility and Tug Pens at Barrow Island to facilitate the transport of LNG to international markets. Westsea Marine has been involved in providing offshore marine solutions and vessels in Australia since it was established in 2002. The company is proud to continue being a part of the Gorgon project, and is already providing quality marine equipment for Preliminary Works and the Materials Offload Facility Wharf Construction phases.
Westsea Marine started its operations in Perth, WA, providing specialised offshore marine solutions to serve its Australian-based clients with a nationally compliant fleet of ocean going towing tugs, anchor handlers and work barges. The Gorgon Project is a joint venture between the Australian subsidiaries of Chevron, ExxonMobil, Shell, Osaka Gas, Tokyo Gas, and Chubu Electric Power. For more information, visit:
www.westseamarine.com
Deployment of Westsea Marine vessels on the Gorgon Project, utilizing the Westsea Anne Marie, Westsea Kestrel, Westsea Hawk, Westsea 3006 off Barrow island WA.
Westsea Gail mobilising Westsea 79 - 300ft Rock Barge For Gorgon LNG Jetty Construction Project
r My Africa: Kenya POSTCARD PROJECT»
PLUTO LNG
Project: Pluto Region: North West (Burrup Peninsula) Operator: Woodside
18 courtesy DIGGINGWoodside & DRILLING MAGAZINE JULY 2012 Image:
JULY 2012 DIGGING & DRILLING MAGAZINE 19
FEATURE ARTICLE»
African Down Under:
Africa-Australia’s most important event
August 29-31 will see the resources world once again descend on Perth for Paydirt Media’s annual Africa Down Under Conference Under’s position as the largest African resources show outside of the African continent.
Now in its 10th year, Africa Down Under has grown from niche event to one of the most important and wellattended forums on the Australian resources calendar. This year’s conference, to be held once again at the Pan Pacific Perth and Novotel Langley Plaza, is set to break the attendance records which were set in 2011. Some 90 speakers will give their accounts of the African resources sector while 175 exhibition booths will keep the expected 2,500 delegates fully engaged throughout the threeday event. The forum will be opened by Australian Minister for Foreign Affairs, Bob Carr, and will also be addressed by Federal Resources Minister Martin Ferguson. A number of other leading Government and opposition figures will be in attendance, as well Western Australian State Government cabinet members. From Africa, the conference organisers are set to welcome more than a dozen senior African ministers as well as delegations from across the continent, cementing Africa Down
America.”
As well as company and government presentations, the conference In 2011, the event attracted ministerial will showcase some of the many delegations from; Zimbabwe, South community and social development Africa, Sierra Leone, Senegal, Mali, initiatives Australian companies have Namibia, Mozambique, Liberia, Ghana, launched in their host communities. Burkina Faso, Angola, Botswana and the newly independent South Sudan. Junior and mid-tier Australian mining companies are gaining a reputation The level of engagement between across Africa for being good corporate the Australian mining industry and citizens, supporting community the African continent has grown development by initiating training remarkably in recent years. There and skills programmes, building are now more than 200 Australian infrastructure and assisting in the companies with projects in 43 establishment of sustainable, locallyAfrican countries, from Mauritania owned businesses. in the north-west to Mozambique in the south-east. In addition, some The increasing scope of the conference 250 mining services companies are will see this year’s activities span the expanding their scope across the entire week with the African Research Forum and International Mining continent. for Development Centre holding Although difficult to gauge, it is complementary seminars leading up believed that total Australian to the main event. These seminars will investment in African resources look at the way Australian-African projects has now reached beyond relations are developing and how $20 billion. Australia can provide assistance in building capacity in the emerging Conference organiser and Paydirt nations of Africa, particularly in Media executive chairman Bill Repard regards to the industries of mining, said he had been “bowled over” by the agriculture and education. level of interest created by this year’s conference. Sponsorship opportunities for the event are all but closed however “We are delighted with the enthusiasm delegate spaces remain. For more this year’s event is being received information please contact Tammy with,” Repard said. “From humble Caldwell on +61 8 9321 0355 or beginnings, Africa Down Under has tammy@paydirt.com.au. grown into a vital part of the always busy international resources calendar. We will be welcoming visitors from Courtesy: Paydirt Media across the African continent as well as from Britain, Europe and North
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JULY 2012 DIGGING & DRILLING MAGAZINE 23
2 Compass Road, Jandakot Airport Western Australia
24 courtesy DIGGINGWoodside & DRILLING MAGAZINE JULY 2012 Image:
WOODSIDE Lifts Production Target
Woodside recorded a 43% increase in production compared to the prior quarter, due to the successful ramp up of the Pluto LNG Plant and high reliability from the foundation business. Woodside CEO Peter Coleman said that following Onshore Terminal. commissioning in March the Pluto LNG Plant had achieved • While the produced volume for the quarter was 20.1 MMboe superior performance compared to the expected ramp-up. the sales volume of 18.6 MMboe was 1.5 MMboe lower due “This quarter saw continued strong performance from the to timing of cargo liftings and delivery. Sales volumes were foundation business further enhanced by Pluto production, 28% higher than the previous quarter, while revenue was which has exceeded expectations with the delivery of eight 20% higher with the second quarter experiencing lower LNG cargoes,” Mr Coleman said. realised prices. “This performance is testament to the capabilities of • Production volumes were 23% higher compared to the our operations team and, together with higher planned previous corresponding period, while the revenue increase utilisation in the second half, has resulted in an increase to was 14% as a result of the timing of cargo liftings and lower our 2012 production target from a range of 73 to 81 Million realised prices. The average Brent price for the quarter was Barrels of Oil Equivalent (MMboe) to a higher range of 77 $108.76/bbl, down 7% from $116.99/bbl in the previous corresponding period.Page 2 of 9 to 83 MMboe. “The balance sheet will also be strengthened by the sale of a minority portion of Woodside’s interest in the proposed Browse LNG Development to Japan Australia LNG (MIMI • Pluto LNG: First LNG production was achieved on 29 April Browse) Pty Ltd (MIMI) for $2 billion. The sale is expected and the first LNG cargo departed 12 May. to be completed in the second half of 2012.”
ACHIEVEMENTS:
• From start-up to the end of June 2012, Pluto LNG produced 599,564 tonnes of LNG and 513,038 barrels of condensate (100% project). Capacity utilisation for the first two • Production was 43% higher than the previous quarter, months of operation was forecast to be 36% however an predominantly due to start-up of the Pluto LNG Plant and actual capacity utilisation of 80% was achieved. better reliability from the Vincent oil field. In addition, • Ramp-up has progressed better than expected, resulting Q1 2012 had been negatively impacted by higher than in excess production beyond contracted volumes. This has expected cyclone activity and North Rankin Redevelopment allowed the sale of three spot cargoes during the quarter. activities. The Q2 2012 increase was partially offset by lower Production in the second half 2012 is expected to more availability at the North West Shelf (NWS) from planned closely align with the annual delivery plan. maintenance shut-downs of LNG Train 4 and the Trunkline
Key Points:
activities will commence in Q3 2012 with offshore pipelay planned in the first half of 2013. • Vincent Oil Field: Tieback of the VNB-H7 infill well was completed, enhancing production by approximately 11,000 bbl/day (Woodside share 6,600 bbl/day). • Browse LNG: In May Woodside accepted an offer from MIMI to purchase an estimated 14.7% interest in the Browse LNG Development for $2 billion.
The Woodside Donaldson LNG vessel departed the Pluto LNG Park with the first Pluto LNG cargo on 12 May 2012. • North Rankin Redevelopment Project: The North Rankin B topsides were successf ully set down on the jacket on 1 April 2012. During the quarter the permanent living quarters on North Rankin B were commissioned. The project remains on budget and on schedule for completion in 2013.
The receipt and evaluation of tender bids for the engineering, procurement and construction of the Browse facilities continued during the quarter. The evaluation and assurance process for offshore bids has begun. Final downstream bids are due in Q3 2012. Engineering and environment studies also continued at the proposed Browse LNG Precinct and offshore.
Subsequent to the end the quarter, the Environmental Protection Agency recommended conditional approval • Greater Western Flank Phase 1 Project: Engineering, of the Western Australian Government’s proposed Browse procurement and fabrication activities are progressing LNG Precinct south of James Price. to plan with first production targeted in early 2016. Drilling Images: courtesy Woodside
26 DIGGING & DRILLING MAGAZINE JULY 2012
FEATURE ARTICLE»
FEATURE ARTICLE »
MINING INDABA
Record numbers point to style of Africa
A record 7,020 delegates arrived in Cape Town for African mining’s biggest event with representatives from mining, suppliers, services, banking, investment and financial media circles.
JULY 2012 DIGGING & DRILLING MAGAZINE 29
FEATURE ARTICLE »
Record numbers point to style of Africa A record 7,020 delegates arrived in Cape Town for African mining’s biggest event with representatives from mining, suppliers, services, banking, investment and financial media circles.
While the northern hemisphere shivered under snow And while for those from the UK, Europe and North America and dire financial outlooks, Australia and Africa further it could be seen as an excuse to spend a few days in the cemented their growing relationship during this year’s sun, the massive contingent from down under proved once Mining Indaba and where better to do it than South Africa’s again that Australia is becoming the partner of choice when Mother City, Cape Town. it comes to African mining projects. A record 7,020 delegates arrived in Cape Town for African mining’s biggest event with representatives from mining, suppliers, services, banking, investment and financial media circles.
The four day conference saw presentations from over 90 companies, a commodity outlook forum covering everything from antimony to zircon, a full-day sustainability session and a series of ministerial forums. The importance of the conference to developing nations was summed up by In what has been widely touted for some time as the the large and visible presence of the Afghanistan ministry century of the developing world, Africa is still the continent of mines, a country that can in no way claim to be African. with most promise, and furthest to go.
30 DIGGING & DRILLING MAGAZINE JULY 2012
Some members of the Aussie contingent at this year’s Mining Indaba in Cape Town
“In all, the event proved just how much opportunity is on offer in Africa in the 21st Century and with Australian companies so well respected by host communities and governments, the bond that has been forged across the ocean is certain to continue.” While scepticism is always present, there remains a feeling that Africa’s time is coming. As democracy spreads throughout the continent and governments realise that bribery and corruption are not sustainable, so the investment opportunities increase.
In all, the event proved just how much opportunity is on offer in Africa in the 21st Century and with Australian companies so well respected by host communities and governments, the bond that has been forged across the ocean is certain to continue.
For the host nation, it is an opportunity to remind the world of just how important South Africa has been to the history of mining. After several years of despondency, the announcement by Minister of Mines, Susan Shabangu, that a policy of nationalisation would not be adopted has given new impetus to the industry, even if other problems remain.
Courtesy: Paydirt
JULY 2012 DIGGING & DRILLING MAGAZINE 31
SUB FEATURE »
POSCO, Marubeni pour $3.6 billion into Australia iron ore project Japan’s Marubeni, steelmaker and shipbuilder STX Corp will buy 30 percent of an Australian iron ore project for A$3.5 billion ($3.6 billion), the latest in a series of investments by Asian firms in the country’s iron ore sector. The Roy Hill project, owned by Australia’s richest woman The investment will provide the consortium with a combined Hancock Prospecting and located in the Pilbara iron 16.5 million metric tonnes of iron per year from the mine. belt, plans to start shipping ore in 2014, with production expected to peak at 55 million metric tonnes (60.68 million “We are pleased to finalize this strategic alliance with companies whose countries need our iron ore and with tons) a year. the mutual determination to make this project a success,” At that rate, the mine would match the current production Rinehart, chairwoman of privately-held Hancock, said in rates of Australia’s no. 3 producer Fortescue Metals. a statement. Industry experts have said the price the Asian companies were paying was high, possibly as much as 15-20 percent A key component of the project is a dedicated 342-km more than other iron ore deals, and was affecting the view railway that connects the mine to export terminals in Port Hedland. of the valuation of other iron ore assets. “It shows how undervalued Fortescue is,” Fortescue Chief Trading house Marubeni will buy 12.5 percent of the project Executive Nev Power told reporters last week when asked for A$1.5 billion, while POSCO will get 15 percent for A$1.7 to comment on the price POSCO had agreed in January for billion and STX 2.5 percent for A$300 million, the Japanese its portion of the deal that Marubeni announced on Friday. company said. However, some industry executives and a banker not involved in the deal told Reuters the higher price was justified as the project, expected to cost A$9.5 billion to build, has one of the last remaining high quality iron ore lodes.
Rating agency Standard & Poor’s said it expects the project’s mining cost to reach A$9.5 billion and that Marubeni will fund most of its share via a project finance loan. Its BBB/Stable ratings on Marubeni would not be affected by the investment, S&P said.
They also highlighted it has already won state approvals for a rail line and port berths, a big stumbling block for many other projects.
By Yuko Inoue and James Regan
32 DIGGING & DRILLING MAGAZINE JULY 2012
Photo credit: Industry Leaders Magazine
SERIES OF ASIAN MINE DEALS The investment is Marubeni’s first in iron ore, adding to a long list of Asian companies that have taken direct stakes in Australia’s iron ore lodes to feed steel demand which is expected to remain strong for many years ahead given rapid urbanization. Marubeni, strong in copper and grain investments, had made it a top priority to acquire iron ore assets. POSCO first bought into the Roy Hill project in January 2010, taking a 3.25 percent stake with an option to increase it to 15 percent once the project completed a feasibility study. Roy Hill has indicated reserves of more than 2.4 billion tonnes of iron ore, according to the company. Excluding the Hancock project, Australian iron ore miners collectively have earmarked $35 billion for growth plans. Fortescue this month launched a $1 billion bond offering in unsecured notes to help fund its plans to nearly triple annual production to 155 million metric tonnes by the middle of next year.
Rio Tinto is spending heavily to boost output to 283 million metric tonnes a year by the second half of 2013 from 225 million metric tonnes now. BHP Billiton last week said it was sticking with its $10 billion iron ore expansion plan and was mining ore at a rate of 165 million to 170 million metric tonnes per year. Commodities forecasters are divided on whether such a surge in supply coinciding with a Chinese economic cooloff will finally push the global seaborne market for iron ore into oversupply over the next 12 months or so, after three years of heady growth. China accounts for about 60 percent of world trade in iron ore. Hancock, controlled by Rinehart, the world’s 29th richest person based on Forbes magazine’s latest rich list, is also developing a smaller iron ore mine in the Pilbara with Rio Tinto, slated to yield 15 million tonnes per year starting in mid-2013. ($1 = 0.9685 Australian dollars)
Courtesy: Reuters
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